Insurance and Disasters

Andrew's Lessons Served Responders Well in New York

--an invited comment

Ten years ago, public, private, and nonprofit organizations that dealt with disasters entered a new era that forever changed their response to catastrophes. When Hurricane Andrew slammed into south Florida in August 1992, the storm moved more than roofs, trees, and assorted debris. It ultimately compelled our institutions to find innovative ways to work as full-fledged partners in both responding to disasters and rebuilding our communities and economies afterward.

After the attacks of September 11, those painful lessons proved invaluable in improving the subsequent response by government agencies. Another important responder to most disasters, the insurance industry, plays a vital role in providing funds quickly for victims who need to rebuild their homes and restore their lives. The lessons from Hurricane Andrew were just as valuable for these private sector responders.

Andrew’s intensity flattened entire communities and placed severe stress on households, all levels of government, and many private sector institutions. As organizations rushed to respond, it soon became apparent that coordination, cooperation, and communications among these groups were lacking. The initial response to Andrew—in which insurance adjusters were denied prompt access to the disaster scene and victims encountered obstacles in obtaining required permits to begin repair—impeded the rebuilding process. By contrast, coordination between the insurance industry, emergency management, and other government agencies in New York helped expedite recovery. How did this change come about?

Disasters, devastating as they can be, provide invaluable experiences that can be used to lessen the impacts of future events. Engineers and other building professionals study structural failures to learn how to make buildings stronger. It follows that groups involved in disaster response and recovery can learn from problematic response efforts to improve the way they do things in the next catastrophe.

Many insurance providers, whose claim checks usually represent one of the first vital steps in a community’s rebuilding efforts, work to help coordinate the critical role that public and private entities play in disaster preparedness, response, and recovery. Every responding organization—public, private, or nonprofit—benefits from understanding the roles of other responders and what they bring to the process. Following Andrew, insurers and other groups developed a "Partners in Recovery" program in Florida, which assembled insurance company leaders, state regulatory officials, and the emergency management community, to identify better ways to preserve life and mitigate damage through greater cooperation, planning, and response.

Using this effort in Florida as a model, the Institute for Business and Home Safety (IBHS) developed a national program, State Disaster Coalitions, with the purpose of forming long-term partnerships at the state level among public- and private- sector leaders to enhance cooperation, communication, and the leveraging of resources following a major event. In March of 2000, the first of many meetings with New York state officials took place to establish that state’s Disaster Coalition. New York became the first state to develop and utilize the IBHS State Disaster Coalition model. The following entities worked together to create the coalition:

  • the New York Department of Insurance,

  • the New York Department of Emergency Management,

  • the Institute for Business and Home Safety and its Response and Recovery Committee,

  • the New York Insurance Association,

  • several insurance companies, and

  • the Federal Emergency Management Agency.

Two months after the first meeting, New York Governor George Pataki issued a public announcement supporting the Disaster Coalition. During the summer of 2001, using the scenario of a major hurricane striking Long Island, coalition participants conducted two "tabletop" exercises and technology tests under the leadership of the New York Emergency Management Agency to evaluate the plan’s readiness and the soundness of its strategy. Participants considered both exercises to be successful and the framework in place for a unified and aggressive public/private response for a major event in the state. The Disaster Coalition was ready to deal with disaster, come hell or high water. Unfortunately, hell came first.

Just a few weeks later, terrorists attacked the World Trade Center and the Pentagon. As the country reeled from the horrific images of the damaged buildings, coalition representatives moved into the Albany-based Insurance Emergency Operations Center to solve problems quickly and efficiently while working as part of a team on behalf of the victims.

By 8:00 a.m. on September 12, the state of New York’s Insurance Department had activated its Albany-based Insurance Emergency Operations Center (IEOC). (The department’s Manhattan office had been damaged and evacuated). Fourteen insurance company catastrophe representatives and two trade association members of the coalition—the Insurance Disaster Liaisons—began work that morning. Industry-wide emergency communications were distributed from a remote location—Waco, Texas—via an IBHS representative (an executive from Allstate Insurance) who had been designated in the coalition plan as New York Insurance Industry Disaster Coordinator.

During these first critical hours, as America realized the full magnitude of the attacks, the insurance industry and its regulators already knew they faced a daunting challenge that cut across virtually all lines of insurance. Yet, the financial needs of most victims who filed insurance claims were met. Two months later, only 20 complaints had been filed with the New York Department of Insurance out of nearly 19,000 total claims, by all accounts an unprecedented ratio following a catastrophe of this magnitude.

The New York Disaster Coalition members and insurance catastrophe team leaders met two months following the attacks to assess how well the plan functioned under such daunting conditions. During the gathering, numerous issues were discussed relating to disaster response problems, such as access to impacted areas for claims adjusters. In addition, a coalition representative from an insurance company said that people in his home office knew this disaster would dwarf all others, "but New York could handle it" because New York had a Disaster Coalition capable of responding in the best way possible under catastrophic conditions.

And respond they did. As they had in the aftermath of Andrew and subsequent major disasters, insurance representatives created the Disaster Insurance Information Office to provide on-the-spot information on the industry’s response, supplying claim filing tips and maintaining a dialogue with the public through an active consumer outreach program. Staffed by the Insurance Information Institute, the office was supported by 20 property/casualty, life, and health insurance associations, including IBHS. In addition to carrying out the plan that was in place for a natural disaster, members of the IBHS Response and Recovery Committee and the Commercial Lines Committee rapidly printed a guide for businesses affected by disaster. Getting Back to Business was published and distributed immediately. The Federal Emergency Management Agency, the U.S. Small Business Administration, and the New York Department of Insurance requested thousands of copies to distribute as well. They understood the essential concept of the disaster responders’ mission—breaking down barriers to serve victims.

It’s hard to think that things could have been worse on September 11, but the lessons learned from Andrew led the way so that victims could be helped faster and recovery could take place more quickly through public and private partnership.

Harvey Ryland, Institute for Business & Home Safety

Copies of Getting Back to Business are available from the IBHS web site: http://www.ibhs.org.

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